POSTSCRIPT / October 28, 2007 / Sunday


Philippine STAR Columnist

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It's futile to question pardon granted to Erap

INDECENT HASTE: To most people familiar with how Filipino politicians operate, President Gloria Arroyo’s eventually pardoning her predecessor Joseph “Erap” Estrada was a foregone conclusion.

What many of us did not expect was the lightning speed with which presidential clemency struck from the blue sky.

“Why the indecent and undue haste?” asked Special Prosecutor Dennis Villa-Ignacio, who had worked hard with the prosecution team that pinned down the former president. (I assume, however, that he knows the pardon stands on solid legal ground.)

But with the objections of potent blocs pressing the government to make a forceful statement against corruption, questions over the pardon and its timing are not likely to die down soon.

* * *

SERVICE DE LUXE: Erap’s release with full civil and political rights intact came only one day after President Arroyo signed the pardon papers, and just six weeks after he was convicted of plunder last Sept. 12 by the Sandiganbayan.

Malacanang marshalled government resources to ensure that the release order was signed before 5 p.m. Friday, the last working day before the long weekend.

A helicopter whisked the papers to the Sandiganbayan office in Quezon City after Erap signed them at 3:30 p.m. in his rest house in Tanay. After beating the 5 p.m. close of office hours, the documents were then flown back to him.

In two hours after he signed his agreement to the pardon, the 70-year-old Erap was a free man again.

* * *

THE END: Whatever objections may arise, that is “The End” of this latest episode of Erap’s political bio-film.

The granting of clemency in Erap’s legal situation is the sole prerogative of the President. I doubt if the judiciary can review, much less nullify, the action of President Arroyo.

All politicians and we kibitzers may have no choice but to live with it.

* * *

MISSED TARGETS: As of end September, third-quarter reports from the Bureau of Internal Revenue and the Bureau of Customs showed that the agencies again failed to meet revenue targets.

The BIR collected P521.9 billion for the first nine months of the year, or P45 billion short of its P566.9-billion target. Customs, on the other hand, collected P153 billion in the same period, or P12 billion short of its P165-billion goal.

The government may be forced to cut expenditures, including those for vital infrastructure and social projects of the President.

The alternative is to borrow more money to fill the budget gap. But given the country’s ballooning debt, borrowing to cover expenses should be resorted to only as a last recourse.

* * *

WHY THE CUT?: What many people do not know is that the BIR could have generated more money had not the Department of Finance intervened in its collection campaign.

For instance, the BIR was set to collect excise taxes from Pall Mall cigarettes when the DoF suddenly reduced the tax rate on the brand produced locally by La Suerte Cigar and Cigarette Factory for UK-based British American Tobacco Corp.

Instead of the P26.06 tax that the BIR said was the correct rate for every pack of Pall Mall, Finance Undersecretary Gaudencio Mendoza ruled that it should pay only P6.74.

Instead of helping the BIR, the DoF made it harder for it to collect more taxes when government needed revenues most.

* * *

SURVEY: During a recent hearing of the Senate ways and means committee chaired by Sen. Francis Escudero, it was estimated that while the tax-reduction order benefited Pall Mall, it deprived the government of some P100 million in foregone annual revenues.

In newspaper ads, British American Tobacco justified the P6.74/pack tax on Pall Mall by claiming that it was the correct rate. It faulted the BIR under then Commissioner Jose Mario Bunag for allegedly failing to conduct a market survey. It added that BIR erred in applying on local Pall Mall the same P26.06 tax rate slapped on imported Pall Mall.

Actually the BIR conducted a survey in February 2006, but failed to find local Pall Mall in stores. This was probably due to the fact that La Suerte, BAT’s local licensee, made only 30 cases of Pall Mall in 2004 and 111 cases in 2005.

* * *

NO PALL MALL: This minimal production looked like a token presence, since there are nearly 600,000 supermarkets, groceries and sari-sari stores throughout the Philippines.

No wonder the BIR’s Large Taxpayers Service could not find Pall Mall when it conducted the survey even in heavily populated areas like Quezon City.

With these findings, then BIR chief Bunag upheld the ruling of the BIR’s legal service that Pall Mall whether locally-made or sold at Duty Free Shops should be taxed the same rate of P25 (now P26.06) per pack.

Incidentally, while the BIR could not find local Pall Mall in stores, imported Pall Mall were being sold at Duty Free Philippines as late as January 2006 despite claims by its maker that they had pulled them out since they allegedly started making them locally in 2004.

* * *

LOBBY: Despite this, Mendoza disregarded the studies and rulings of BIR offices, including that of Bunag, that Pall Mall should be slapped the highest excise tax rate then prevailing.

Even Sen. Juan Ponce Enrile, chairman of the Senate finance committee, was reportedly taken aback by the DoF tax-reduction move.

Enrile said the DoF order “tinkered” with the excise tax law. Escudero said that if there had to be tax reclassification, “it should be higher, not lower.”

When Congress goes back to work next month. the proper Senate and House committees should look into this suspicious action of the DoF. The father of a Finance official reportedly lobbied for Pall Mall.

* * *

(First published in the Philippine STAR of October 28 2007)

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